Dave Ramsey: Invest above the requirement

I’m a teacher, and the school system I work for puts 13.5 percent of my pay into a public teacher retirement fund. They also match this amount. I’ve read about your rule of investing 15 percent of your income toward retirement, so should I invest 1.5 percent into another retirement fund in order to max out my savings at 15 percent of my income? What do you think about the idea of opening another retirement account at a full 15 percent of what I make?

Patrick

Dear Patrick,

It sounds like you’ve got a pretty good pension plan through your school system. I can’t help but wonder, though, what would happen to the money if the system were to take a big financial hit. I’m not predicting bad things, but the truth is that you just never know what might happen. In other words, there’s no way I’d lean on this fund as my one and only source of retirement income. Never put all of your financial eggs in one basket!

I wouldn’t go as far as to pour an additional 15 percent into a different retirement plan, but I’d definitely look at putting seven to 10 percent into a Roth IRA. I want you to have some money that’s separate from the school system account just in case things go south with their retirement fund. If you’re married, and your wife works and generates income, she needs to be putting 15 percent into a plan, also. You can never have too much money during retirement!

Intellectual behavior and will

Dear Dave,

You talk a lot about delaying gratification in order to attain what you really want. This is such a difficult thing to do. What techniques do you use to make this happen?

Anonymous

Dear Anonymous,

You’re right, it is hard. Sometimes it’s very difficult to push away from that second piece of pie or get up off your tail and exercise. But learning to delay pleasure is part of the process when it comes to growing up emotionally.

I think when you’ve practiced it long enough your mind begins to grasp the concept that what’s waiting down the road is much better than whatever happens to be sitting in front of you at the moment. I didn’t want to get up and run this morning, but I know that I look and feel better when I do my roadwork. That’s why I made myself get out of bed early and run three miles.

The whole process has to start in the brain, and drop from there to the heart, where it promotes understanding and mature actions. So really, it’s an intellectual behavior that affects will. You have to logically and intellectually grasp the concept, then think about where you’re going and where you’ll end up as a result of your actions!

Dave Ramsey is a nationally known personal finance expert. Visit www.davesays.org for more financial advice.